gwen: the first friday to have month brings more bad jobs news. plus, the week in politics, tonight on "washington week." >> you got hit by a truck. it's going to take a while for you to mend and that's what's happened to our economy. gwen: hard news to spin. slower than expected job growth as unemployment creeps up. >> we've wasted $2 trillion and what have we gotten for it? gwen: is this issue going to decide the 2012 election? >> i'm mitt romney. i believe in america, and i'm running for president of the united states.

gwen: or do republicans have to sort out their primary challengers first? >> the field isn't set yet. gwen: or might it all depend on whether congress and the white house can agree to reduce debt? >> the question is where's the in the >> we simply disagree. gwen: we sort through what matters with the reporters covering the week, deborah solomon of "the wall street journal," jeff zeleny of "the new york times" and john harwood of cnbc and "new york times." >> award-winning reporting and analysis, covering history as it happens. live from our nation's capital, this is "washington week" with gwen ifill, produced in association with "national journal." corporate funding is provided by -- >> we know why we're here. to give our war fighters every advantage. >> to deliver technologies that anticipate the future today.

>> and help protect america everywhere, to the battle space to cyberspace. >> around the globe, the people of boeing are working together to give our best for america's best. >> that's why we're here. >> corporate funding is also provided by prudential financial. additional funding for "washington week" is provided by the annenberg foundation, the corporation for public broadcasting and from contributions to your pbs station from viewers like you. thank you. once again, live from washington, moderator gwen ifill. gwen: good evening. the unemployment rate kicked up again last month from nine to 9 .1% and ago -- although 54

thundershowers -- 54 thousands were added to the roles, that was less than expected. the president pointed to the auto industry rescue. >> today all three automakers are turning a profit. that hasn't happened since 2004. today all three american automakers are gaining market share. that hasn't happened since 1995, and today i'm proud to announce the government has been completely repaid for the investments we made under my watch by chrysler. gwen: but republicans aren't buying that. >> you talk to job creators around the country like we have, they'll tell you that the overtaxing, overregulating and overspending that's going on here in washington is creating uncertainty and holding them back. gwen: there was also bad news this week about home prices and manufacturing. so where is the recovery,

deborah? >> it's in hiding at the moment. we're in what most economists are calling a soft patch. the economy is still growing and we're still adding jobs but not anywhere near the number we need. housing prices fell. manufacturing, which had been drivering the recovery stagnated and for the first time in six months it started sed shedding jobs. you're seeing more than one in three unemployed people have been out of work for more than a year and 14 million americans want to find a job and can't. the economy that had been gaining momentum has stagnated and it's unclear whether this is temporary, caused by hiccups, ert quake, the commodity prices have been rising. the long slog ahead of us seems pretty high.

gwen: it also seems like a cumulative effect of all things, whether or not someone can argue if there's a slow recovery, people begin to internalize the notion that we're in bad shape. they can't buy a house, don't want to buy a house. >> the psychological impact is huge. one of the problems during the financial crisis was that the confidence wasn't there. things were very bad but made even worse because people were worried about losing their jobs. businesses were worried about demand. the administration ask particularly worried about that now. even if things are in a "recovery" it doesn't feel that way so people are worried, scaling back, not spending money as much as they would be. that's a real risk to this recovery. >> i talked yesterday to the economist mark alexandery who pointed to oil prices, japan and other factors. he expects growth to accelerate in the second part of the year

and that the labor market is recovering even though this number is weak. is that the consensus among economists? >> there's a mix. there definitely is a school of thought that the recovery is going to accelerate later this summer or possibly in the fall. but people are worried. there are a bunch of economists today who said you can't put lipstick on this pig. these numbers are really bad and june is expected to be bad as well. there's a school of thought -- there's a wait and see attitude but a worry that things are not going to improve a at the rate people had thought at the beginning of the year. >> is there anything washington can -- is able to do in the long term or short term to alleviate this? gwen: we saw the president out today saying look what washington did that saved us from being worse. >> they can talk about how

they've done good things to overcome the psychological hurdle. hey, look, things are getting better. >> that's therapy. >> exactly. there's lots they can do but won't do. right now the name of the game is belt tightening and you have to wonder whether the things they've done have had any kind of real impact. the fed is about to end its grand experiment of printing money and pumping it into the money. a lot of people don't think it's done very much. there's a question about how effective the government programs have been. if we could get the deficit agreement we can do tax cuts here, infrastructure spending. there's not much the government can do at this moment. >> republicans in that clip were talking about washington overtaxing. the president has agreed to extend the bush tax cuts.

are they proposing more additional new tax cuts? >> i think they would like to do maybe additional payroll tax cuts, especially heading into campaign season, anything to help put money back in people's pockets. they wants to come to some sort of agreement. they figure if they can get a deficit agreement underway they can also have a little extra spending. gwen: how much has this leaked over into the presidential zphain how much do you hear people talking about the economy as a central issue? >> it's going to be the central issue and i think it's a huge risk for the democrats and obama and i think the only thing they really can do is talk about the progress that we have made. you don't get credit for saying things would have been worse so they have to point to the areas where we are seeing some growth and manufacturing, you're seeing obviously jobs being added. it's not going to be easy but

they're going to have to try and turn the conversation. gwen: let's move to the campaign trail where the republican presidential contenders agree that the election will turn on the economy. officially in this week, mitt romney. unofficially, former utah governor john huntsman and officially stirring the pot, sarah meilen -- palin. >> when obama came to office we wished him well and hoped for the best. now in the third year of his four-year term, we have more than slogans and promises to judge him by. barack obama has failed america. gwen: and palin took aim at romney. >> health care plan -- in my opinion any mandate coming from government is not a good thing, so obviously, and i'm not doing what -- but there will be more

explanation coming from former governor romney on his support for a government mandate. gwen: as it happened she was on her way to new hampshire when she said this on the same day that romney was making his well-publicized in advance formal announcement. >> she was going to a clambake and i think she rubbed salt to four -- pour in the wounds. of course there was offense intended. but if she was arriving in new hampshire one day early -- but i think at the end of the day governor romney got a lot of attention for the message he was giving. he finally announced he was run for president. of course, this is his second bid for the republican nomination and he's been kind of in a shell for at least the six months or so, only holding one campaign event every month. he's taken a different approach in his second time around. four years ago he was

everywhere at this point. all over iowa. he had been on tv twizz -- advertising on television commercials for some four months at this point. he started february of 2007, which i had forgotten. so i think he is trying to introduce himself and trying to capitalize on the effect that the economy is the central issue and he thinks this is his moment. he's a businessman and former governor. he is not talking about health care but that's all everyone else wants to talk about. that's what sarah palin was doing there. he didn't give many specifics but he's finally agreed to join the field and be in the first debate in two weeks in new hampshire. gwen: if he has run before and he has. he was governor and how is he doing in the still-forming field? it seems there are a lot of people nipping at his heels fairly closely. >> a lot are and he has more people in the republican party

who don't like him than do. but his strategy is i am going to be the last man standing. i'm going to raise more money than anyone else, we're going to push through the primaries. i am going to still be alive after iowa, new hampshire, south carolina into florida. we'll see how that goes. one strategy they haven't quite figured out is iowa. he spent more than $10 million there four years ago and this year he's thrirt -- flirting with the idea of being there or not. he was there a few weeks ago. a fire alarm goes off in the middle of his presentation and cuts it short. i think he knows he has to play everywhere if he's really going to be the front-runner. and the white house has their eye on mitt romney. they're watching him. he could be the nominee as well as anyone. >> i'm tempted to ask you what kind of hair gel romney was

going. i was at that press conference yesterday. my hair was going all over the place. he was in control there. i want to talk about the field. a lot of talk this week about the weakness of the republican field. romney as a weak frontrunner. this is often said about a party's field of candidates before somebody emerges. they said it in 1992 and then oops, guess what, bill clinton was in that field. what is your assessment of how much trouble the republicans are in this terms of not having their best players on the field? >> i'm not convinced this is necessarily a weak field. there are three former governors in the race, which is always an impressive credential to run for president. mitt romney, john huntsman from utah and tim pawlenty from minnesota. all of them are very strong in their own degrees among republicans. and then you have several interesting others. michelle bachman from

minnesota. >> newt gingrich had a following. >> helps on a two-week vacation from his presidential campaign. but i don't think it's any weaker of a field -- i was thinking back to the first campaign i wover covered in 1999 in iowa. that was june 13 of 1999 when george w. bush made his first campaign visit. he was the governor in the field but there were several other people and that wasn't particularly a strong field except his last name was bush. i think this field is fine. there's been hankering for governor mitch williams to get in. haley barbour. >> on the economy do the republicans have to have ideas, plans or sit enough just to beat up on obama? >> i think it's enough for now to beat up on obama. after all, it worked for obama when he was run for president. when you're a candidate you can say things.

so at this point i think republicans cannot offer spervings but down if line as they start to different from one another, look for people to ask specifics about their economic plans. we talked early, there's not that much specifically washington can do so there's not that much a presidential candidate can propose because they don't have access to all the things. gwen: you talked about how early it is in the race and how things change. john edwards in two cycles was a formidable candidate and today we saw a pretty spectacular fall as he was indicted. >> it was pretty unbelievable. four years ago right now he was in iowa and new hampshire. it just goes to show we never exactly know what is going on in a campaign. a lot of voters had their eyes

on senate edwards and thought he was the strongest nominee. back in 2003, people inside the bush white house thought he was the guy who could beat george w. bush. of course, it's not ended well for him and it's a tragedy all the way around. we could argue the merits of the this is a right prosecution or not. a jury will decide that in north carolina. but it just goes to show that flash and appearance is perhaps not the most important thing in a candidate. he had a lot of that and he had substance as well -- gwen: and even if the government can't prove his case, the things he's admitted to are things people find pretty objectionable. meanwhile, far from the madding crowd behind closed doors there seemed to be actual deal making going on involving the federal budget. both sides accused the other

but in private what's going on? >> they are making some progress and a lot of the public posturing you're seeing is part of that progress. the issue is not identifying cuts that can be made or taxes that can be raised, tax loopholes, but it's a task of political management. how does john boehner bring long -- along his caucus so that he can come to closure on the deal and get enough democrats on the other side to make a majority? gwen: sound complicated. >> it is and the reason the government shutdown talks went to the brink. we had a vote this week where the house brought up the so-called clean debt limit and john boehner has said ok, we're giving the administration that what they want, a vote.

it went down without the support of the democrats. that could have a step forward. john boehner has a bunch of members who were elected who don't want even less than others for decade have wanted to vote for debt limit. it's totally partisan. the president is a republican and asks for debt limit increases, democrats flee and vote no. the opposite if there are democrats in the white house. now the republican members can say i oppose a debt limit increase and then when we get to the summer and there's a deal on spending reduction they can say i insisted on those and now i'm going to vote for the debt limb limit increase. -- debt limit increase. what is the mix of broad targets where you can't agree on specifics and some specifics both in the entitlement and discretionary programs in order

to achieve a coalition to get that debt limit increase? it's going to be ugly along the way. probably not going to get done too quickly. some people talked about the early part of july but i think it's likely to go up to the break. >> how serious is this if the debt limit is not raised? is there a uniform agreement that this would be catastrophic for the markets and things. i hear some presidential candidates saying we're not sure about that. of course they don't have to vote for it. if you have to take a vote and own this, how serious is it for voting against raising it? >> ultimately you're not going to know the gravity of the vote until we see the consequences. if you have a repeat of what happened when the first tarp vote went down and the market goes down 777 points within the first 24 hours, that all of a sudden is going to be on the shoulder of those members. people right now say it's not

that big a deep. gwen: didn't moody's come out with a report this week saying this would be a very bad thing globally? >> yes. if you look at the testimony we have from analysts like moody's, from history where republican and democratic presidents and treasury secretaries have said it's unthinkable for us not to raise the debt limit, i think you have to say the balance of the evidence is on the people trying toe avoid the potential hiccup in the markets and everyone has agreed, republican and democrat, for quite a long time that it would be a severe adverse affect on the markets. >> the votes this week on the debt limit seemed to be almost like a charade, that they had to have it fail once. the spending cuts are going to be the thing. how are they going to get in creement agreement on spending cuts. nobody wants to be seen doing this heading into an election

season. where are we going to see these cuts and will people really be able to get a deal and a clean vote by the end of the summer 134 >> i think we will get a deal. remember that president obama, like paul ryan and the republicans in the house and be talking about net deficit reduction of $10 trillion over four years. if you do a hard freeze that would get you $2 trillion. and john boehner said the other day that we have to have at least as much spending cuts as we maximize the debt ceiling. democrats are insisting on some tax increases. republicans are resisting. call them loopholes. make you can get a deal on that. on medicare they've set aside the ryan reductions. but they are talking about some

relatively modest waste fraud abuse and better collection of bills. they're talking about an agriculture savings, some kind of defense. if you put all those together, you will have the guts of what could be a deal, along with broad targets and triggers and people will call it a day and say now let's go fight about 2012. gwen: i'm saving that piece of tape and i'm going to roll it back in july, august? >> you can hit me with that. gwen: thank you, everybody. we're going to leave you a few moments earlier so you can take time to support your local station. you'll find additional stories and analysis from me and our panelists on our website. keep up with daily developments on the pbs news hour and we'll see you again around the table next week on "washington week." good night. every thursday, get a preview

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